If you look at what has happened in the bond markets over the last almost two months, you get a pretty good picture of how expectations have changed. Mid may was the height of inflation madness, and since then the 5 and 10 year inflation breakevens have rolled over in a head and shoulders pattern, which is a pretty good indicator of a peak having been made in the inflation expectations market. Both peaked at around 2.5% and are 10% off of their highs. But as I said, more interesting is the market action as to how they got there. I am not much of a believer in technical analysis leading to fundamental insights, but since bond traders use it widely, it is a good map of their thoughts. Further, 10 year yields have come down a lot. 25% or so from their highs.
Second, the rollover in the commodities markets is really interesting. We now "know," or have a pretty good idea, that the decrease in commodities prices is directly related to China wanting to bring down prices and their regulators made some moves to do so.
https://www.cnbc.com/2021/06/17/com...-tumble-on-china-crackdown-rising-dollar.html. Ask yourself why they would want to do this, if they were benefitting from the rise. The answer is that they don't believe there is sufficient demand for commodities at those prices, and that things are softening.
Third, the only commodity that is really continuing to do well is oil, though as I have pointed out, it is well below its multi year highs. And oil prices rising is not a sign of mass inflation as much as it is a precursor to a decline in economic activity. That isn't to say it has no inflationary influence, but its influence depends a lot on what the greater economic situation looks like.
